Even as the midcaps continue to reel under pressure, tanking by more than 3% on Monday, Motilal Oswal\u2019s Raamdeo Agrawal says notes that midcap stocks have fallen by more than 25% in a matter of just 6 months. In a letter to investors, Raamdeo Agrawal, co-founder of \u00a0Motilal Oswal Financial Services says that investors must learn to distinguish between permanent loss and quotational loss. \u201cPermanent Capital Loss refers to a massive fall in stock price because the value of the underlying business is significantly eroded. The proxy for value is a company\u2019s profits and profitability. Value erosion (i.e. lower profits), and hence, Permanent Capital Loss in a stock may happen due to a variety of reasons, both industry-specific and\/or company specific,\u201d he wrote in the letter. And what is quotational loss? \u201cUnlike Permanent Capital Loss, Quotational Loss is merely a short-term fall in the stock price with the underlying value broadly intact. Some reasons for Quotational Loss are Fall in the broader market itself; and very high valuations,\u201d he explained. Elaborating further on the concept of quotational loss, Raamdeo Agrawal explains that \u00a0quotational loss in a stock offers an excellent buying opportunity due to unilateral lowering of valuations. However, buying during the quotational loss phase demands two things from the investor, a high level of conviction that the setback is temporary; and a high level of courage and patience, he said. \u201cIt requires going against the popular saying, \u201cDon\u2019t catch a falling knife!,\u201d he noted. \u00a0 So what should investors do to overcome the current carnage in the stock market? Agrawal says that the investors must evaluate their portfolio and discern if the investments have resulted in a permanent loss or a qoutational loss. \u201cEvaluate the likely reasons for the price fall. If there are signs of a Permanent Capital Loss, cut your losses and run. However, if it is just a Quotational Loss, back up the truck and load. You will most likely end up with a Permanent Capital Gain,\u201d he writes.